NEW YORK (CNNfn) - Polaroid Corp. is considering the sale of its unit that produces driver's licenses and photo IDs as the instant film maker scrambles for ways to reduce $950 million in debt, sources familiar with the situation said.|
Several companies reportedly are interested in buying the business, known as ID Systems, which has sales of $80 million a year. Another option under consideration is a leveraged buyout of the unit by company officials, sources told CNNfn.com.
Polaroid (PRD: unchanged at $1.41, Research, Estimates) spokesman Skip Colcord declined to comment other than to reiterate the company's statement in July that it was considering the sale of all or part of the company in an effort to bring down debt incurred during the 1980s fending off a takeover attempt.
A source familiar with the situation told CNNfn it may be difficult to sell the entire ID, which requires film manufacturing. The source said one option would be to sell most of the unit and then supply film to the purchasing company.
One of the companies interested in the ID business is Viisage (VISG: up $0.09 to $2.00, Research, Estimates), No. 2 in the ID business behind Polaroid, and which also specializes in emerging facial recognition technology.
CEO Thomas Colatosti told CNNfn.com Friday that Viisage has discussed acquiring the ID business with Polaroid over the past year, and said there would be tremendous synergies if they were to merge. But he declined to confirm whether the company had entered serious talks with Polaroid.
"We know this business. We like this business, and we'd like to do anything we can either directly or through an acquisition to get bigger faster," Colatosti said. "If they were ever interested, it would be a very interesting opportunity and very beneficial. We have had discussions in the past both directly and through advisers."
Cambridge, Mass.-based Polaroid also is working to placate bondholders angered after it said it would withhold interest payments as it works on a restructuring plan.
On Aug. 10, Polaroid said it had obtained an extension on its loan waivers and an extra $10 million from its creditors in order to keep it going as it constructs a plan to get out of debt.
Analysts have been expecting the company to file for voluntary bankruptcy as it restructures the business, selling off unneeded units.
Sources close to the situation said Friday that one likely scenario would be an out-of-court restructuring in which Polaroid would sell non-core units such as the ID business and its polarized sunglasses division. After that, the company could file a restructuring plan organized around its new digital film printing technology dubbed Opal and Onyx.
Polaroid, which despite its problems still has the best-selling camera in the United States, the i-zone, would keep that business as a cash cow. However, a partner still is needed to help the company launch and distribute Opal & Onyx.